Facebook ads' cost-per-clicks up in second quarter

The median cost-per-click (CPC) for Facebook ads rose 22% in the second quarter, compared with Q1, according to a study released July 12 by digital marketing firm Efficient Frontier. The company expects Facebook CPCs to continue to see double-digit growth through the rest of this year.

Siddharth Shah, director of business analytics at Efficient Frontier, said the findings indicate that more marketers are using Facebook ads to acquire fans on the social network as a result of better ROI.

“When we looked at about 20 million fans across various brands that we have, we found that on average, one brand post leads to 100 comments in response,” said Shah. However, he added that interaction rates on Facebook will likely decrease as the social networking site “matures” because consumers will become desensitized to marketers' efforts in conjunction with their increased presence.

The Facebook-related findings in the “Global Digital Marketing Performance Report: Q2 2011” report are the result of data from social marketing company Context Optional, which Efficient Frontier acquired in May. The findings are based on the ad spend data of more than 60 Efficient Frontier clients.

Conversely to the growth in ad spending on Facebook, the quarter-over-quarter increase in search ad spending fell from 17% in the first quarter to 8% in Q2. However, Shah said the data does not suggest ad spending on the social network is subtracting from search spending.

“A question a lot of marketers and analysts have is whether Facebook's spend is incremental or whether there's some cannibalization of search,” he said. “We're not seeing any cannibalization yet. It's mostly incremental.”

To illustrate the point, Shah said spending on Facebook is only 5% of advertisers' overall spending on search. The slowdown in search spending is the result of “global macroeconomic conditions,” as well as the real-time nature of search.

“It's not like traditional media where you have a spending allocation [for the year],” said Shah. “The spend and the ROI are so dynamic that you can adjust them on a daily basis.”